A speaker system can cost as little as $35. Or as much as $350,000. As a normal person, you…
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We're gonna be talking in-ear earbuds—canalphones, really, or in-ear monitors, if you're snooty—since all the good stuff goes deep into your precious earholes. We aren't talking about headphones because great headphones aren't the most discreet things around—can't defeat physics, children. Unless you derive some sick pleasure from jogging with a pair of giant cans bolted to your head, earbuds are the way to go.

It's All About the Drivers—No, Not Those Kind

Whether you're talking about headphones or earbuds, they work a lot like loudspeakers, just miniaturized. The key element in both are drivers, though earphone drivers are a lot smaller, and do a lot less work to make the same music.

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There are two main types of drivers: The a dynamic driver works just like a traditional one in big ol' speaker. The benefit of the dynamic driver is that it produces a nice bass response, though it can be hard to miniaturize.

A balanced armature driver is pretty common in serious in-ear monitors, since it's easy to shrink down. Originally found in hearing aids, it houses a magnetic armature that moves when an electric current runs through the coil, putting pressure on the diaphragm, creating sound. It can be, and often is, paired with a dynamic driver.

Most earbuds just have the one driver, though more and more have multiple drivers. That costs more 'cause it's harder to cram more than one into a tiny casing meant to rest gravity-free in your ear. With multiple drivers also comes a "crossover network," circuitry meant to divide music into different frequencies and route them to the appropriate drivers, an additional payload to stuff into that tight space. Once all that is crammed in, however, multi-driver earbuds typically sound better than single-driver ones, because the woofer, tweeter and mid-range horn are more innately equipped to handle their own domains of sound—from boomy bass to sizzly treble.

Among the least expensive multiple-driver earbuds are Apple's fancier $80 in-ear earbuds, which use two drivers, a tweeter for highs, and another for everything else. It gets more expensive as you creep up. Shure's three-driver SE530 lists for $500 (but can be found for much less). Ultimate Ears' UE-11 Pro, which will run you a ridiculous $1150, come with a correspondingly ridiculous four drivers. That's one for mid-range and one for highs and two for bass.

Some companies opt for a single driver because they think it's better, since there aren't complications with crossover networks, trying to get all the drivers to work together to produce seamless sound. On the other hand, with a single driver, you're asking one driver to do everything: highs, lows and mid-range, says Stereophile senior contributing editor Michael Fremer Fremer. (Yes, that Michael Fremer.) That's why , FutureSonics, for instance, makers of pro monitoring gear, charges so much for their single-driver earbuds. "A really good single-driver can sound really good," says Fremer.

This is Michael Fremer. He's listening to "Avalon" by Roxy Music on his $350,000…
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What It's Made Of, How It's Made

Besides more drivers, what you get in pricier earbuds is (surprise, surprise) better materials, finer build quality and a more focused design. Michael Johns, headphones manager for Shure—known for earbuds with MSRP ranging from $100 to $500 but rarely double digits—told me that most of the really cheap ($20) headphones on the market are basically rebranded crap from no-name factories, and that when you buy those with suggested retail pricing between $50 and $100, you're mostly paying for style, not sound. The top-tier brands, of which there are many, tend to design and engineer their own headphones. The expense of that is, unfortunately, passed on to you.

The cost of raw ingredients is also passed to you—the cable material, the magnet behind the diaphragm, the diaphragm material itself, the overall quality of the driver, and the enclosure. (Again, all of the stuff that jacks up the price of higher quality loudspeakers too.) None of that stuff, when it's well made, is cheap. Fremer says, for instance, that better headphones actually use stronger magnets than cheaper headphones. As you might guess, the more powerful the magnet, the higher the cost.

The Fit

With legit in-ear buds, fit matters a lot, because the seal is critical. Not only does a good seal mean less ambient noise infiltrates your ears—allowing you to keep your volume low while still catching the full dynamic range—but an airtight seal is how you get decent bass response. And you want something shoved deep down inside your ear to be comfortable, as well as fit, so there's a lot of different kinds of tips earbud makers have come up with. Besides the standard rubber bulb, there's squishy foam, and the Christmas tree-lookin' triple-flange sleeves. What works best often comes down to your own ears and personal preference, which is why better earbuds come with a ton of tips.

What Do I Buy?

So, uh, what's the sweet spot price for great headphones? If Shure and Fremer had their way, everybody would spend upwards of $200 on their earbuds, but if you twist their arm, they'll agree that $100 is where buds start getting decent. The real trick, according to Fremer, is just getting people to "spend that first hundred bucks."

The law of diminishing returns tends to kick in above that point: The difference between $300 set of buds and a $400 pair is nowhere near the jump from $20 to $100. Even smaller is the difference in models between generations. The best value on the market might be a previous-gen version of Shure's 500 series buds at a cut rate ($290), but if you can find $100 earbuds for 70 bucks, it's even better.

Interestingly, Fremer says what you're looking for in great earbuds is "a relatively flat frequency response so no frequency is accentuated above another," so "the product that sounds the best is usually the one that impresses you the least at first." Buds that tout big bass, for instance, don't actually have better bass, just more of it. (You can always adjust the EQ if you want more bass.)